What about MNOs’ IoT Business Models?

We are entering in a new era where the data connectivity will expand to integrate ordinary things around us. The Internet of Things (IoT) technology already allows a myriad of “things” (and its integrated electronic modules) to be connected by companies and end users to collect data and automate simple daily tasks, in an unprecedented scale. All this capabilities are being driven by new or evolved technologies like computer miniaturization, big data analytics, microelectromechanical systems (sensors and actuators), IPv6, cloud, virtualization and Low Power Wide Area (LPWA).

Mobile IoT increasing importance

Even considering that most of IoT’s applications are based on non-mobile devices, Ericsson Mobility Report (June 2016) predicts 14.2 billion non-cellular IoT devices versus 1.5 billion cellular IoT devices by 2021, the mobile connectivity is of increasing importance. The same report also foreseen that IoT mobile devices will surpass mobile handsets by 2018. Due to wireless technologies (LPWA) evolution, the IoT devices will tolerate better battery life (over 10 years), low cost connection and high coverage.

As result, big technology companies (e.g. Apple, GE, Google, IBM, Oracle, etc.) are building their own IoT ecosystems and products, some based on services as data analytics and cloud, and other based on dedicated hardware (modules and semiconductors) and software (Operating Systems and protocols). On the other side, a bunch of new start-ups are also developing their own systems and products. Some of them are targeting IoT’s Application and Service Providers and other pursuing the end user market.

IoT Business Models

But how will the mobile network operators (MNOs) define their business models to capture space into IoT market? The LPWA and other narrow band wireless access technologies gave us an easy answer, but the IoT device scale, small payload data and low cost connectivity could not be enough to remunerate the upcoming cost to build a new access network.

Anticipating the market, some companies are already building dedicated wireless networks based on non-standard LPWA to connect the IoT devices. LoRa and SIGFOX are key technologies on this field. Current proprietary LPWA network architectures rely on centralized gateway to perform data aggregation from various devices and data preprocessing. Companies offering LPWA accesses are using this architecture design to also offer value added services thru the gateway, providing dashboards, reports, security and API access to IoT devices.

On the other side, the 3GPP standards based technologies (mostly NB-IoT and LTE-M) allow direct access to IoT devices, bringing flexibility to IoT application providers and opening new opportunity to third party players to offer services as data analytics, managed service and security. This is an apparent benefit for market development but can hurt the MNO business models, which can be constrained to a low cost dumb pipe offer.

Hopefully 3GPP defined a MNO standard network architecture that can help in adding value to the IoT connectivity business. The specification TS23.638 defines an element called Service Capability Exposure Function (SCEF) that provides a means to securely expose the services and capabilities exposed by 3GPP network interfaces. This element can also aggregate MNOs’ value added services and expose its capabilities as APIs to third party actors.


The conclusion is that mobile IoT will demand a new set of value added services ranging from data analytics, security, network policies, cloud, etc.  As all these services will be useful and common for all IoT applications, upcoming aggregators companies can play a key role reducing costs and offering a scalable product to IoT service providers.

The MNOs’ business models must consider these new services to leverage the investments needed to build the access networks for IoT. It must also be considered that connectivity management platform acting also as standard 3GPP SCEF element and API gateway to application providers can generate a new revenue stream to future MNOs’ IoT products.